THE EFFECT OF STRUCTURAL ADJUSTMENT PROGRAMME IN DEVELOPING COUNTRIES: CASE STUDY OF NIGERIA AND UGANDA
INTRODUCTIONA structural adjustment program is a high-powered austerity plan imposed by the Bretton Woods Institutions, i.e. the World Bank and the International Monetary Fund (IMF), in many developing countries as conditionality for debt recovery and economic restructuring. In effect, the ultimate goal of a structural adjustment program is to help indebted countries pay off their debts and have a revitalised economy that will sustain future debt payment. This usually takes the form of extreme free-market strategies, such as deregulating banking sectors, removing trade barriers, privatizing natural resources and public industries, devaluing currencies, strictly adhering to balanced budgets, changing national laws to make an environment more conducive to foreign investment, and building up export economies. In recent years poverty reduction has become a cornerstone.

The programme may be implemented as part of an initial agreement to lend money, or it may be brought in later as part of conditions for the borrowing nations to receive better terms of payment on past loans. (Beneria 1996). The origins of the programme could be traced to the two packages adopted by Philippines in September 1980 and the more high profile one, by Mexico in August 1982 due to the excessive debt burden that had ensued as a result of certain developments between the late 1970s and early 1980s. Due to the position of Mexico as one of the largest economy in Latin American, the announcement by the government that it could not meet its debt repayment obligations sent panic waves in Northern creditor countries and financial institutions. To prevent an avalanche of eminent financial crises if other governments of developing countries were to default in their loan repayments, the governments of Europe and the US and international commercial banks in the Industrialised World tasked the IMF and World Bank with the responsibility of ensuring debt recovery. The objective was to develop stringent policies to be implemented by highly indebted developing countries as conditionality for further financial assistance that will engender economic growth and recovery, to generate resources that will support debt payment.

Subsequent Structural Adjustment Programmes were implemented extensively over one hundred countries in Latin America, Eastern Europe, Africa and Asia in the early 1980s when the economies of these countries could not sustain the high cost of debt servicing which could mainly be attributable to the oil price hike by the Oil Producing Countries (OPEC) in the 1970s and, other trade issues which worsen the deficit.

The debt crises was as a result of the Oil Producing Countries coming together as a cartel in the 1970s and using their numerical strength to increase the price of crude oil on the international market in their effort to generate more revenue. The profit generated also known as “petrol dollar” from the increases were invested with financial institutions in the advanced countries in Europe and the United States. Due to the quantum of monies lying waste in the vaults of these banks, very lax lending terms (very low interest rates) were adopted by these banks to lend monies to developing countries, most of whom were already in distress as a result of the oil crises (Toussaint and Comanne, 1995:15.

The initial idea for contracting the loans to stimulate growth and accelerate development in many of the developing countries, were economically sound, but as per the World Bank summarisation, most of the loans were diverted for ostentatious projects. Secondarily, the...

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...﻿ISSUES OF PAKISTAN ECONOMY
ASSIGNMENT
TOPIC:
STRUCTURALADJUSTMENT PROGRAMMES
SUBMITTED TO
Ms. Ayesha
SUBMITTED BY
Syeda Sasha Sohail
BSc. Economics
Semester VII-A
DATE OF SUBMISSION
23th September, 2013
KINNAIRD COLLEGE FOR WOMEN
StructuralAdjustment Programs
StructuralAdjustment Programmes (SAPs) are economic policies for developing countries that have been promoted by the World Bank and International Monetary Fund (IMF) since the early 1980s. StructuralAdjustment Policies are economic policies which countries must follow in order to qualify for new World Bank and International Monetary Fund (IMF) lower interest rates loans and help them make debt repayments on the older debts owed to commercial banks, governments and the World Bank.
Measures Imposed Under SAPs
Although SAPs differ somewhat from country to country, they typically include:
A shift from growing diverse food crops for domestic consumption to specializing in the production of cash crops or other commodities (like cotton, coffee, copper, tin etc.) for export;
Abolishing food and agricultural subsidies to reduce government expenditures;
Deep cuts to social programmes usually in the areas of health, education and housing and massive layoffs in the civil service;
Currency devaluation measures which increase import costs while reducing...

...StructuralAdjustment Programs
“In theory, SAPs are meant to assist countries to return to economic recovery. In practice, the opposite has happened. SAPs have destroyed any chance to achieve sustainable economic development that would meet national priorities...IMF-World bank reform packages constitute a coherent program for economic and social collapse…They destroy the entire fabric of the domestic economy’” -
Herbert Jaunch, Labor Resource and Research Institute (LaRRI), Namibia
To find the multiple roots of the debt problem in Africa, you have to go back to the European colonial administration of Africa. Many of the colonial powers were only in Africa for resource extraction. Because of that, the people of Africa were only trained in one area of work, and adding to that problem, nearly all of the profits of the country bypassed the workers and went directly to the European colonial powers. When the colonial powers left Africa, many of African countries were taken over by leaders that were even more corrupt than the aforementioned colonial powers. They kept exporting products, but they kept all the profit for themselves. This caused great disparity between the ruler's wealth and the common people, causing many of the countries to sink into grave poverty.
After OPEC (Organization of the Petroleum Exporting Countries) began seeing huge profits in the 1970s and began putting the majority of their profits into banks from...

...Structuraladjustments are the policies implemented by the International Monitory Fund (IMF) and the World Bank in developing countries. These policy changes are conditions for getting new loans from the International Monetary Fund (IMF) or World Bank, or for obtaining lower interest rates on existing loans.
Conditionalities are implemented to ensure that the money lent will be spent in accordance with the overall goals of the loan. The StructuralAdjustment Programs (SAPs) are created with the goal of reducing the borrowing country's fiscal imbalances. The bank from which a borrowing country receives its loan depends upon the type of necessity. The SAPs are supposed to allow the economies of the developing countries to become more market oriented. This then forces them to concentrate more on trade and production so it can boost their economy.
Through conditionalities, StructuralAdjustment Programs generally implement "free market" programs and policy. These programs include internal changes (notably privatization and deregulation) as well as external ones, especially the reduction of trade barriers. Countries which fail to enact these programs may be subject to severe fiscal discipline. Critics argue that financial threats to poor countries amount to blackmail; that poor nations have no choice but to comply.
Definition of 'Current Account Deficit'
Occurs when a country's total...

...independence in 1980, Zimbabwe’s new leader, Robert Mugabe and his ZANU-PF government are said to have inherited nearly 700 million dollars in debt from the former Rhodesian Regime. This set the stage for what can be referred to as the “uneven development,“ as it is argued that Robert Mugabe did not have any other option, than to adopt the neoliberal policies of the World Bank and International Monetary Fund in an attempt to free the Zimbabwean economy (Bond 93). In 1991, Zimbabwe introduced what is known as the Economic StructuralAdjustment (ESAP), to stimulate economic growth and reduce poverty. The government would “de-emphasise its expenditure on social services and emphasise investment in the material production sectors such as agriculture, mining and manufacturing”(Gibbons 10). To begin economic restructuring, the Zimbabwean government received financial assistance from the World Bank (WB) and the International Monetary Fund (IMF). To qualify for assistance, the government had to meet certain requirements in the areas of “budget deficit reduction, fiscal and monetary policy reforms, trade liberalization, public enterprise reforms, deregulation of investment, and labour and price controls”(Bond 90). The people of Zimbabwe were promised that their deteriorating economy would be transformed into a strong self-sustaining one. The majority of the people were poor anyway, and did not realize to what extent they would have...

...Introduction
Throughout this assignment I will discuss StructuralAdjustment programmes (SAPs) in different economic regions of the world. I will be looking at Tanzania, which is part of the SADC, To truly understand this, one must first understand what SAPs are.
“StructuralAdjustment Programmes (SAPs) are economic policies for developing countries that have been promoted by the World Bank and International Monetary Fund (IMF) since the early 1980s by the provision of loans conditional on the adoption of such policies. Structuraladjustment loans are loans made by the World Bank. They are designed to encourage the structuraladjustment of an economy by, for example, removing “excess” government controls and promoting market competition as part of the neo-liberal agenda followed by the Bank.” (World health organisation , 2013)
Tanzania
Economic region: SADC
History that lead to StructuralAdjustment Programme
During the 1960's and '70's, Tanzania implemented policies of self-reliance. These included nationalization and price controls. They experienced growth in a short period of time, but a long-run economic downturn. “By the 1980's Tanzania was the world's second poorest country in GDP per capita terms.” (Tanzania, 1996)At that time, Tanzania’s natural resource base became threatened. This...

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StructuralAdjustment Programs: The Impact on Nigerians
Abstract
Word Count: 8,590
Nigeria’s economy for many decades thrived under agricultural exports until the government shifted its focus to crude oil exports. The repercussion of abandoning this sector was later felt in the early 1980s when the world crude oil prices fell and the production quota of Nigeria to the Organization of the Petroleum Exporting Countries (OPEC) dipped. This made the government incur debts which led to balance of payment crisis in the global market that could only be offset with immediate economic reforms. The fiscal burden led the Babangida Administration in 1986 to acquire the International Monetary Fund (IMF) Loan which came with conditional economic policies known as StructuralAdjustment Programs (SAPs), targeted at resuscitating ailing economies. The conditions required the state to privatize its enterprises, liberalize its economy and devalue its currency. The implementation of these economic policies made a significant impact on citizens. SAPs have been widely controversial especially among developing states but this research will seek to examine its impact on Nigerians. The resources for this research will be collected from books, journals and other relevant publications.
Chapter One
1. Introduction
1.1 Statement of Research Problem
Despite the ambitious objectives of Structural...

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Like the economy as a whole, the industrial sector in Ghana has been the subject of much inquiry (in chronological order, see Birmingham et al., 1966/7; Steel, 1977; Page, 1980; Andrea, 1981; Ewusi, 1986; Meier and Steel, 1989; Steel and Webster, 1990; Mosley, Harrigan and Toye, 1991; Sowa et al., 1991 and Rothchild, 1991). As mentioned already, industrial output as a whole has been growing since the adoption of the StructuralAdjustment Programmes in Ghana. Within the industrial sector, it is small and medium scale industry that are increasing in proportion, and large scale industry that is static. The increase in output of the small and medium scale portion has been primarily through increase in the number of firms; entry into Ghanaian industry has been very rapid in recent years, but once established, the firms tend to remain fixed in size and employment. Large scale firms in Ghana have shown little resilience under the StructuralAdjustment Programme. The liberalization of imports has permitted increases in foreign products with which they compete, often with disastrous results for the local industries. A headline from a newspaper (the Weekly Spectator, number 1233, Saturday, 9 November 1991) is 'factories collapsing... over 120 out of business'. The beginning of the article reads as follows:
Over 120 industries in the country have closed down since 1988...

...has created some inefficiency because it would not have solved a given problem or a set of problems more efficiently. The government supply side failures largely result from principal/agent problems.
Market failure - occurs when the supply of a good or service insufficient to meet a demand. A market failure result when prices cannot achieve equilibrium because of some distortions for example, the limits on specific goods and services. In other words, government regulations implemented to promote social wellbeing inevitably result in a degree of market failure.
StructuralAdjustment Programme are economic policies which countries must follow in order to qualify for new World Bank (WB) and International Monetary Fund (IMF) loans and help them make debts repayments on the older dept owed to commercial banks, governments and World Bank, (Whirled Bank Group, 2003).
THE CONDITION OF THE COUNTRY BEFORE STRUCTURALADJUSTMENT
After independence in 1961, the new government adopted the colonial style of economic structure. Between 1960 and 1962, for example agriculture contributed more than 50% to gross national product (GNP), and sisal, coffee, cotton and tea contributed 60% to the total foreign exchange earnings (Taube 1992). Tanzania neglected not only to satisfy its own national food requirements, but also to diversify its export products and promote light manufacturing. Politicians were soon overtaken by the reality...